Bitcoin’s fall: overheated market, Medvedev’s statement and Chinese New Year

Cryptocurrency coach Evgeny Kaminsky’s column about reasons for the next collapse of the main cryptocurrency’s rate

Bitcoin’s fall: overheated market, Medvedev’s statement and Chinese New Year Photo: cryptofeed.ru

The Bitcoin rate fell by more than 25% on 17 January – by 01.50 a.m. Moscow time the cryptocurrency has first cheapened to $10,500 since 1 December 2017. Miner and cryptocurrency coach Evgeny Kaminsky tells Realnoe Vremya's readers the reasons for the next fall, the point of Dmitry Medvedev and Chinese New Year.

''On these days in January, Asian cryptocurrency users always withdraw money''

As usual, there were many variations about what could be the catalyst of the Bitcoin rate's fall. But firstly and most importantly, the market was overheated. The market really had many players who entered with a price of more than $16-17,000 – it's those who wanted to use the last chance.

The market has people who have big volumes of Bitcoins. Nevertheless, different manipulations are needed, this market needs to subside to maintain their liquidity from time to time. And one of the versions is right that such 'subsidence' recently took place. According to another version, this subsidence was organic as a too fast and explosive growth has taken place in recent months.

The third thing attention should be paid to is upcoming Chinese New Year. If we look at the graphics of Bitcoin's price, we can see such a picture has been observed in the last 4 years. There is a strong correction of the Bitcoin rate and in the whole market on 14, 15, 16 January. The thing is that Asian cryptocurrency users always withdraw money, purchase presents, plan their holidays and go on a week-long holiday. As a lasting market player, I've seen such a picture for probably the sixth time.

''There is a strong correction of the Bitcoin rate and in the whole markets on 14, 15, 16 January.'' Photo: photolessons.org

In addition, the foreign media made presuppositions that news from South Korea and China affected the Bitcoin rate – it's told both countries announced their intention again to limit the sale of cryptocurrencies. In my opinion, now these countries don't have an internal understanding of whether they will ban cryptocurrencies or not. On the one hand, it's rumoured (I will note there are no official comments anywhere) that there will be a ban. On the other hand, some officials say a ban isn't planned. It's obvious that altogether this news affects the market anyway, including because cryptocurrencies feel quite fine in South Korea.

''Medvedev is unlikely to have ruined Bitcoin''

Many people also paid attention to Dmitry Medvedev's recent speech on the Gaidar Forum that coincided with the Bitcoin rate's fall. The prime minister claimed that cryptocurrencies could disappear in several years like many online companies in the early 90s. But Medvedev is unlikely to have ruined Bitcoin.

As for our country, here the situation is like in Korea: Russia has absolutely polar views and opinions about cryptocurrencies. Dmitry Medvedev says cryptocurrencies will die and only blockchain will remain. At the same time, functionaries' statements that Russia will launch a cryptoruble in 2019 are opposed to his opinion. In this case, why should one launch a thing that will die? In general, now nobody can come to an agreement, politicians have to make statements on popular topics to remain in the information field.

''Dmitry Medvedev's recent speech on the Gaidar Forum that coincided with the Bitcoin rate's fall.'' Photo: government.ru/

We've seen sudden rises of this cryptocurrency's rate from time to time since Bitcoin's price reached quite serious indicators – a record growth can happen today, while a deep fall can take place in a week. As time goes by, this starts to be considered fine by players. But how should one understand that it's time to raise the alarm? In my opinion, the volume of auctions – the number of real deals that are made at exchanges or offline – will be the main factor here. As soon as auctions won't be interesting for traders and there is a reduction of the volume of auctions (while now the volume is colossal), we will be able to say the interest in cryptocurrencies is falling and there has been a reason for concern.

By Evgeny Kaminsky